Agricultural Competitive Potential and Competitive Position in the International Trade of Agricultural and Food Products in the European Union
Purpose: This paper aimed to evaluate the competitive potential of the agricultural and food sector in the member states of the European Union and identify differences between them with reference to the position of such countries in international agricultural and food trade. Design/Methodology/Approach: The competitive potential was evaluated using a synthetic measure designed using TOPSIS (Technique for Order Preference by Similarity to an Ideal Solution). The potential was confronted with the competitive position of the member states of the European Union in the international trade in agricultural and food products. To this end, among other indicators, the Revealed Comparative Advantage (RCA) index was used. The analysis was based on data from EUROSTAT and FADN (Farm Accountancy Data Network) for years 2007-2017. Findings: The results point to a strong diversification of the level of agricultural development among the member states of the European Union. Four groups of countries characterised by a similar level of the analysed phenomenon were identified. The highest value of the synthetic measure was characteristic of the Netherlands. It was more than 3 times higher than in the country least competitive in that respect (Slovenia). Countries with the highest agricultural competitive potential such as the Netherlands, Belgium, Denmark and France, also maintain a high competitive advantage in the international agricultural and food trade. Many countries, in particular those included in EU-12 (Malta, Romania, Bulgaria, Poland) in the analysed period 2007-2017 significantly improved their competitive position in the agricultural and food trade despite a small increase in the competitive potential of agriculture. Practical Implications: The surveys made it possible to identify countries (mainly new member states of the EU) in which, despite relatively large resources of production factors in agriculture, the competitive potential measured with an aggregate measure designed in this paper, taking into account primarily an advantage in terms of quality and not costs and prices, is low. This points to a need for orienting the Common Agricultural Policy at boosting the dynamics of structural transformations in this sector so that in the future these countries are able to maintain a high competitive position in agricultural and food trade. Originality/Value: An added value of this paper is the analysis of multiple factors affecting the competitiveness of the agricultural and food sector and identification of a group of EU countries by means of a synthetic measure designed using TOPSIS, whereas most papers investigate the effect of one factor with a limited number of competitiveness measures. The analysis of relationships between the competitive capacity and the international competitive position of the countries of the European Union in agricultural and food products further contributes to the originality of the study.